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Doctors and property investment: how much is too much?

Many doctors have a preference for investing in property. It is not hard to see why:

– property is tangible and easily understood; – property investment offers a lot of tax deductions; and – property investment can easily be borrowed for (particularly by doctors).

While quality property is generally a great addition to an investment portfolio, it makes perfect sense not to have all your eggs in one basket. Having a diversified asset base is still one of the most reliable ways to build wealth.

Let me explain why only investing in property is not a good idea for doctors, despite the many benefits it offers, and despite some specialist accountants heavily promoting this strategy.

Too much of a good thing…

Many doctors already have a high dollar exposure to property through their own home, and perhaps also their medical rooms and a holiday house. Having too much exposure to one investment class is never a good idea, as any downturn in the property market may destroy a fair amount of your wealth.

Lumpy, not liquid

A major disadvantage of property is that it is a lumpy asset, the value of which can only be realised when sold. A partial sale is not possible, unless you own various units or apartments in one complex for example. Unlike shares or managed funds, it may also take a long time to find a buyer, and to receive the sale proceeds. This is not so much of a problem if you have other investments in your portfolio.

High costs, low income

The entry and exit costs for property are high, and these affect your capital return. Add to this ongoing costs for residential property such as maintenance, rates, insurance and management fees, all of which erode your income return. The idea of retiring on the income of a residential property portfolio may sound alluring, but it is not ideal, as the net income return is typically only 1-2% after you factor in all the expenses. Other investments such as shares typically have lower costs and higher income returns.

Active management

Property investment is rarely set and forget, particularly for residential property. Often there will be issues with tenants, maintenance, etc that require your attention. To realise the full potential of a property, you may also need to engage in renovations or property development. Whilst you can outsource some of these projects, they will still take away time from your main vocation, and therefore represent a significant opportunity cost.


As I have said before – doctors and property investment go well together, but too much of a good thing can lead to increased risk. Doctors should accumulate wealth through various means and spread their risk. I have assisted many doctors in buying property with strategic planning, and also invest in property myself. Please feel free to contact me to discuss your property investment plans.

About me I specialise in managing and coordinating the financial affairs of medical professionals and have been recognised as one of the best financial planners in Australia. I am a Certified Financial Planner and member of the Financial Planning Association of Australia.

As I understand your time is extremely valuable and scarce, I am able to offer flexible meetings times, including outside business hours and during the weekend. I can even come and meet you somewhere convenient, or talk via videoconference on Skype.

My first consultation is free. I allocate up to 90 minutes to discuss your personal circumstances and to establish how I may best assist you. Where you already have an existing adviser, I would be happy to offer a second opinion. I always quote a fixed dollar fee before we start working together.

Please contact me on or call me direct on 08 9381 2704. You can follow me on Twitter @YvesSchoof or connect with me on Linkedin to receive new articles.

Disclaimer Yves Schoof and Affluence Private Wealth are Authorised Representatives of Synchron, AFS Licence No. 243313. The information posted is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making a decision.

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